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Connecticut Bankruptcy Law Blog

What is the HAFA program?

If your debt situation has gotten out of hand and you fear losing your Connecticut home to foreclosure, you may wish to consider the Home Affordable Foreclosure Alternatives program. As explains, HAFA is a federal governmental program that gives you a foreclosure alternative if you wish to short sell your home or give a deed in lieu of foreclosure to your mortgage lender.

You must meet all six of the following criteria to receive HAFA help:

  1. You must be undergoing a documented financial hardship.
  2. You must have purchased your home more than 12 months ago.
  3. You must have a first mortgage less than $729,750.
  4. You must have obtained your mortgage prior to Jan. 1, 2009.
  5. You must have had no felony convictions in the preceding 10 years for such real estate related crimes as theft, larceny, fraud, tax evasion or money laundering.
  6. Your mortgage must be owned or guaranteed by Fannie Mae and Freddie Mac.

What is predatory lending?

One of the first things you might want to do after a bankruptcy discharge is to repair your credit. As you know, getting approved for a loan is one of the most effective ways to do this. You and other Connecticut residents may find it encouraging to learn that you may have many borrowing options after a bankruptcy. However, you should also learn how to recognize a valid lender from one that is considered predatory.

As NerdWallet explains, predatory lenders often target people fresh out of a bankruptcy or with few financial options, because they are more vulnerable and often eager to get a fresh start and repair their credit. Unscrupulous lending practices can quickly backfire on you and leave you with additional insurmountable debt and ruin your credit again.

What is lien stripping?

If you have a second mortgage on your Connecticut home, you know that your second mortgage holder has the same right as your primary mortgage holder to foreclose on your home if you fail to make your required mortgage payments. What you may not realize, however, is that if you file for Chapter 13 bankruptcy in order to reorganize your debts, you may be able to prevent your second mortgage holder from exercising its foreclosure rights. As explains, such a procedure goes by the name of lien stripping

Unlike a Chapter 7 bankruptcy that discharges your consumer debt but fails to protect your home, a Chapter 13 bankruptcy is a debt reorganization that gives you the opportunity, usually over a three- or five-year period, to get caught up on your debts. Not only does Chapter 13 save your home from foreclosure, in many cases it also can strip your second mortgage holder of the lien it has on your home.

Is Chapter 11 right for me?

You have experienced financial difficulties for several months, but you tried unsuccessfully to get your head above water and conquer your insurmountable debt. You realize that the time has come to consider filing for bankruptcy. A bankruptcy discharge could solve many of your problems, you realize, but you also worry that you might not qualify for Chapter 7 because you have a steady income and may not pass the means test. You and other Connecticut residents may benefit by learning how a Chapter 11 bankruptcy could be the better option.

As you may know, Chapter 11 restructures your debt and allows you to make manageable payments over a period of three to five years, unlike Chapter 7, which discharges your eligible debt. However, those who qualify for Chapter 7 may lose their homes, extra vehicles and other assets to repay creditors before receiving their discharge. FindLaw explains that if you want to keep your home and vehicles, and you have a steady job, Chapter 11 could be your route to debt relief.

The top 5 things you should do after bankruptcy

At the Law Offices of Charles A. Maglieri in Connecticut, we help people file and successfully negotiate their way through bankruptcy. Once you begin your post-bankruptcy life, you should do several things to ensure that it will be far better than the one that led to your financial problems.

One thing you may be most eager to do is reestablish your credit. Before getting a new credit card, however, recommends you do four other things first.

Stigma of bankruptcy exists, although unnecessarily

Our team at the Law Offices of Charles A. Maglieri understands that the prospect of filing for bankruptcy can be overwhelming and frightening for Connecticut residents. You might receive conflicting advice from numerous friends and associates. Bankruptcy should only be used as a last resort, they say, and it will ruin your credibility for life. They may also say you will be embarrassed if your employer finds out, or you may have difficulty finding a job if you are seeking employment with a personal bankruptcy on your record. It can give you a great deal of peace of mind to learn that these claims are largely outdated and untrue.

According to the Balance, a stigma against filing for bankruptcy persists, despite bankruptcy being more common these days than in years past. Many lenders understand the dilemma that people face when they are confronted with insurmountable debt and unexpected financial situations. Soon after your bankruptcy discharge, you may have options for obtaining new loans and rebuilding your credit that you did not realize were possible.

How does the Credit CARD Act benefit you?

Credit cards are a way of life in Connecticut and all other states. Your bank or credit union constantly encourages you to apply for their credit card. The stores at which you shop do likewise. Often you receive unsolicited “pre-approved” credit card applications in the mail.

While it is tempting to avail yourself of all these credit opportunities, you may wish to practice self-limitation. The problem with credit cards is that the amount of debt you accumulate tends to become the amount of credit you have. Many people who file bankruptcy do so because of their overwhelming consumer credit card debt that they now find they cannot pay.

What is the HARP refinance program?

If you are a Connecticut homeowner facing financial difficulties, you may fear that you will be unable to stay current with your mortgage payments and therefore lose your home through foreclosure. Another problem you may face is that your home has lost value since you purchased it and is now worth less than your mortgage balance. If this is your situation, you may wish to check out the Home Affordable Refinance Program, popularly known as HARP.

As explained by The Mortgage Reports, the purpose of HARP is to let you refinance your home at today’s mortgage rates that likely are lower than when you purchased your home. Originally established in 2009, HARP has since helped over 3.3 million homeowners who were “upside down” in their homes to advantageously refinance them. The average annual savings in mortgage payments is approximately 30 percent.

What are the different types of bankruptcy?

If you are a Connecticut resident who feels as though you are drowning in debt, you do have options available to you for debt relief. Bankruptcy options are designed to help you discard the debt in its entirety or to reorganize and set up payment plans in situations where your income cannot meet the demands of what you currently owe.

According to the U.S. Courts, federal courts handle all bankruptcy cases, which are referenced by their chapter in the government's bankruptcy code. The chapter you file under is based on your eligibility.

How can Ch. 13 help you keep your home?

If you are one of the many Americans who are overwhelmed with credit card bills, medical expenses and mortgage payments, you may have considered bankruptcy as an option to gain financial freedom. In fact, bankruptcy may help you manage and eliminate your debt, while enabling you to keep your home and other possessions. Under Chapter 13 bankruptcy, there are steps you can take to make your debt payments more manageable and get out from under the reign of bills and expenses. 

If you have fallen behind on your mortgage payments, Chapter 13 can help to save your home from foreclosure. The trustee appointed to your case will organize your debt and issue affordable monthly payments that will help to eventually relieve your debt. He or she may reduce interest rates, lower monthly payment amounts and consolidate your expenses to minimize payments.

Discuss Your Case With A
Respected Bankruptcy Attorney

Contact my office to discuss your debt relief needs directly with me as your lawyer. I offer a free initial consultation to all new clients where you can learn more about your legal options and what I can do to help you. I am available during regular business hours and by appointment at other times. You can reach me by phone at 860-242-0574 and 860-952-3674 or via email.

My law firm is a debt relief agency as so designated by Congress in the year 2005. I help people file for bankruptcy relief under Title 11 of the United States Code, known as the Bankruptcy Code.

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